Stop Spending With These Four Tricks!

In my last post I talked about how to construct a budget. While that is by far the most effective way to get your finances in check, the second most effective tool is actually being able to curb your spending. Our budget should consist of things we need and hopefully your income can cover those expenses. If you can’t cover your essentials then it’s time to increase your education, get a side hustle, or consider your priorities on wants vs needs.

Stop the Spending – It Makes Good Cents

If all of your necessities are covered, then you start looking at your wants. We all work hard for our money and deserve to spend it on things that make us happy as well as things that we need to survive. As we all know though, what starts as a splurge can often time end in a gross overestimation of what’s in the bank. For that reason, I wanted to give my readers a little help to make it easier to stop spending so much.

The Cash Flow Celt Method to Stop Spending

The most effective way to stop spending is to…well, just stop spending. For me, any splurge purchases that cost more than $50 I won’t buy right then. I force myself to stop and think about it for a few days. If I still want it after my cooldown period, I’ll buy it. Simple as that.

Do your homework! By doing some online research for products you want to buy you can get a great feel for whether or not the product benefits you. You can look at competitors and differing price points; even if you still end up buying the item, you’ll likely be getting the best price than had you just gone out and bought it.

Consider how much time it will take to buy the item. If you go out to lunch every day, then you’re basically giving up 5 hours every week of your income. Want a $1,000 TV? At $20 an hour, you’re making roughly $15 an hour after taxes. That means it will take you 67 hours to pay for that TV. That’s 67 hours of work you would need to do AFTER your other expenses. For me, this is the most effective way to get me to stop spending.

What’s the opportunity cost? If the other three methods don’t get me to stop spending, then I think about what I’m giving up by making the purchase. Going back to the $1,000 TV: I’m giving up $50 next year at a 5% return, or I’m giving up two months of food, or I’m giving up 10 different date nights. Thinking in terms of “what else” is a super effective way to stop spending because it makes you really rationalize what’s important.

Why Saving Beats Spending

I’m currently faced with a comfortable problem – I’ve got too much cash on me right now. A terrible problem to have, I know. However, I’m trying to decide where I will put it. May, historically, for the stock market has been a time when people sell out of their positions. That means prices are going to be depressed which could provide an excellent opportunity to value buy some great market winners. Without this cash on hand, you can’t take advantage of abnormal dips in the market, which means you’re leaving cash on the table.

I could also move money into Peer to Peer Lending. This was the route I thought I would take; however, after Lending Club meltdown, I’m a little weary of putting my money into that right now. I could also use Prosper, but I honestly think I will just hold off for a bit and make sure the industry is still safe. Some forthcoming government regulations could curb the large returns and I don’t want to get caught putting money into a non-profitable venture.

Ultimately, I have choice. That’s why you need to stop spending on the frivolous. You’re locking yourself into a certain lifestyle by not controlling your spending. By accruing this money, I am reducing my lifestyle risk, because I can invest some serious capital into money making ventures rather than being forced to live paycheck to paycheck.

Readers, what things do you do to stop spending on unnecessary things? Do you agree that having money more equates to more freedom? Be sure to discuss in the comments below! And don’t forget to like and share on Facebook. Show your friends you’re on your way to conquering your financial empire!

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I'm just a local business and finance nerd looking to help people get educated about small business, marketing, and personal finance! I write about anything and everything that I can tie into those themes. I'm also Central Florida's only Kilted Realtor, so I write about Real Estate too! Check out my About Me page to see the origins of Cash Flow Celt.